Bombardment of Horrific Data Reported Today Around the World

April 23, 2020

There were 4.427 million new U.S. jobless insurance claims last week. The 5.787 million average of new claims in theĀ  past four weeks is up from an average of 2.898 million in the prior four-week period and just 210,750 per week during the four weeks through February 22. Continuing jobless insurance claims of 15.976 million in the week ending April 11 was up from 1.702 million in the week of March 17.

Japan’s composite purchasing managers index fell to a record low of 27.8 in April from 36.2 in March, 47.0 in February and 50.1 in the first month of this year. April’s reading suggests that real GDP this quarter will contract by at least 10%. The component for services printed at 22.8, a series low, and manufacturing at 37.8 showed the sharpest rate of contraction in 132 months.

Euroland’s composite PMI sank to a record low in this 22-year-old data series and at 13.5 was more than 10 points below analyst expectations and 22.7 points below the previous all-time low during the Great Recession. Service sector activity at 11.7 contracted at a record low, and manufacturing printed at a 134-month low of 33.6. Selling price inflation was at a 130-month low. The data imply a contraction of Euroland real GDP in the second quarter of 7.5% or more.

The German and French composite purchasing manager indices in April printed at 17.1 and 11.2, respectively. Both results represent all-time lows. The collective composite PMI for all other economies using the euro slumped to 11.5 from 25.0.

Britain’s composite purchasing managers index dropped 23.1 points to a record low of 12.9 in April, suggesting real GDP this quarter will fall by at least 7%. Manufacturing fell to 32.9, lower than any result since that data began to be collected in 1992. Services (12.3), as in the other economies, has taken a bigger hit from the pandemic and lockdown than manufacturing, and it should be noted that full lockdowns were generally not imposed until late in the data-collection period.

The Commonwealth Bank of Australia’s composite PMI for that economy fell to a record low of 22.4 in April from 39.4 in March, 49.0 in February and 50.2 in January. Again, the reading for services of 19.6 was considerably more depressed than that of 45.6 in manufacturing.

Consumer confidence in Germany collapsed to a record low reading in May of -23.4 from +2.3 in April and 8.3 for March.

The British consumer confidence index printed at -34 in March after -7 in February

The CBI monthly survey of British industrial trends showed orders crashing to a 129-month low of -56 in April versus -29 in March and -18 in February. Business sentiment swung from +23 in March to -87 in April, representing the greatest monthly drop in 45 years. The selling price component of the survey fell 18 index points to minus 11.

French business sentiment dropped to a reading of 61.7 in April from 94.4 in March and 105.0 in February. Services printed at 55.0 after 91.7, and manufacturing slipped to 81.9 from 97.7. The employment index fell 25.3 index points to 70.1.

Swedish business sentiment fell to a reading in April of 53.1 after 91.4 in March and 97.9 in February. Swedish consumer confidence printed at 73.9, lowest since November 2008, after readings of 89.4 in March and 98.2 in February.

Norwegian business confidence deteriorated to a reading of -17.5 in the first quarter from -0.2 last autumn and +6.7 a year earlier.

What’s unique about all these very weak data is not just the levels of the latest readings but how quickly economic activity has vanished and how synchronized the recession has been. Even in the Great Recession and 1930s depression, there was more variability between the paths followed by different economies, and the speed of descent was less pronounced. All this leaves policymakers with a Sophie’s choice: maintain lockdowns and risk permanent loss of many businesses, or open things up and risk creating an even more horrific second wave of the pandemic.

In market action today,

  • The dollar rose 0.4% against the euro and 0.3% relative to the Swiss franc but fell against a longer list of other currencies, including 0.9% relative to the kiwi, 0.8% vis-a-vis the Australian dollar, 0.4% versus the loonie, 0.3% against the yen, 0.2% versus sterling and 0.1% against the yuan and peso.
  • West Texas Intermediate crude oil rebounded by a further 15.8% so far to $15.80 per dollar. The price of gold is 0.8% higher.
  • Share prices in Asia rose 1.5% in Japan and India, 1.0% in India, and 0.6% in Indonesia and Taiwan but fell 0.2% in China and 0.3% in Singapore. Stock markets in Europe show mixed results so far with gains of 0.8% in Italy, 0.4% in France and 0.5% in Spain but drops of 0.8% in Switzerland and 0.1% in Great Britain. U.S. equities opened higher.
  • Ten-year sovereign debt yields have fallen 19 basis points in Greece, 7 bps in Spain and Portugal, 4 bps in Italy and France, 3 bps in the U.K. and 1 basis point in Germany. The 10-year U.S. Treasury and Japanese JGB yields are flat.

The National Bank of Ukraine slashed its policy interest rate by four times the expected amount to 8.0% from 10%, bringing the total reduction fromĀ  the three cuts this year to 450 basis points. The rate, which had crested at 18.0% from September 2018 to April 2019, is now at its lowest since March 2014. Officials in a released statement projected the key rate would likely fall at least another full percentage point later this year and maybe by more if necessary. They anticipate real GDP contracting around 5% this year and inflation ending the year at about 6%.

Japan’s indices of leading and coincident economic indicators for February were each revised a tad lower.

CPI inflation in Hong Kong edged up 0.1 percentage point to 2.3% last month.

Consumer prices in Singapore fell 0.3% on month and were unchanged against a year earlier in March.

In the 12 months to March, retail sales in Taiwan fell 3.4%, which is the biggest on-year decline in 13 months.

South Korean real GDP contracted 1.4% in the first quarter of 2020, causing on-year growth to drop by a greater-than-expected full percentage point to 1.3%.

Coronavirus cases and deaths worldwide now total 2-2/3rd million and 185,504, respectively.

U.S. new home sales, Kansas City Fed manufacturing index, and IHS-compiled preliminary purchasing managers survey findings will be released later this morning.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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